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Western Price Survey

May 11, 2018Summer Challenges Ahead for CAISO Grid

The California Independent System Operator expects “challenging summer operating conditions” and tight capacity—particularly during high demand hours on especially hot nights—based on the current resource mix and increasing renewables generation.

Diminished hydro supplies, combined with less natural gas generation and supply constraints, are complicating grid management, according to the CAISO 2018 Summer Assessment, released this week (see story at [13.1]).

Working natural gas in storage was 1,432 Bcf as of May 4, according to U.S. Energy Information Administration estimates. This is a net increase of 89 Bcf compared with the previous week. Natural gas storage levels are now 37.6 percent less than a year ago and 26.6 percent less than the five-year average.

Among Western natural gas hubs, Alberta gas gained the most, up 36 cents to 48 cents/MMBtu. Southern California CityGate lost the most value, down 17 cents to $2.87/MMBtu in trading.

Alberta natural gas prices dipped below $1 starting in May, and then slipped into negative territory for the first time on May 4. Western Canada natural gas maintenance constraints and decreased demand are limiting exports and keeping a lid on prices.

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Wind generation in the U.S. should increase this year to 741,000 MWh/day from a 2017 average of 697,000 MWh/day, according to the EIA’s latest Short-Term Energy Outlook, released May 8. This should increase to 766,000 MWh/day in 2019. Should key conditions for hydro—precipitation and snowpack—remain as forecast, there would be 747,000 MWh/day of hydro generation in 2019. This would be the first year that wind generation would surpass hydropower production.

Hydro’s share of generation was 7 percent in 2017 and should “fall slightly below that level” in 2018 and 2019, according to the EIA.

A new CAISO record for instantaneous solar generation of 10,625 MW was reached May 7, surpassing the 10,586 MW record, set May 4.

Demand on the CAISO grid reached 30,602 MW May 8, while total renewables on the CAISO grid reached 15,735 MW May 10, supplying roughly 53 percent of demand.

Western peak power prices generally fell between $1.55 and as much as $9.90 by May 10. Palo Verde proved the exception, adding $11.50 to reach $30/MWh.

Mid-Columbia nighttime power fell into negative pricing, ending at -10 cents/MWh; however, South of Path 15 lost the most value, down $5.55 to $16.80/MWh. North of Path 15 added the most among Western hubs, up $1.75 to $20.70/MWh by May 3.–Linda Dailey Paulson.

Archives of the Western Price Survey for the past year are also available online.

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